Golden Corporation declared and paid $5,100 of cash dividends during the current year ended December 31. Its financial statements also reported the following summarized data: Current Previous Income statement Sales revenue Cost of goods sold Gross profit Operating expenses Interest expense Income before income taxes Income tax expense Net income Balance Sheet Cash Accounts receivable (net) Inventory Property and equipment (net) $285,000 152,000 133,000 74.300 4,800 53.900 16,170 $ 37.230 $249.000 142.000 107.000 67,200 4,700 35,100 5.100 $30,000 Current liabilities Note payable (long-term) Common stock (par $5) Additional paid-in capital Retained earnings $ 8,830 40.000 61,000 66,000 $175,830 $ 16,200 66.000 42.600 9,200 41,830 $175,830 $ 10, 100 33,500 56,000 59.000 $150,600 $ 33,700 66.000 42,600 7,100 9200 $150, 600 Lemon COCK (par 1 Additional paid-in capital Retained earnings 42,600 42,600 9.200 7,100 41.8309 .200 $175,830 $158,600 Required: 1. Compute the gross profit percentage for the current and previous years. Are the current year results better, or worse, than those for the previous year? 2. Compute the net profit margin for the current and previous years. Are the current year results better, or worse, than those for the previous year? 3. Compute the earnings per share for the current and previous years. Are the current year results better, or worse, than those for the previous year? TIP: To calculate EPS, use the balance in Common Stock to determine the number of shares outstanding, Common Stock equals the par value per share times the number of shares. 4. Stockholders' equity totaled $42,600 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 5. Net property and equipment totaled $45,500 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current year results better, or worse, than those for the previous year? 6. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the company's asset growth? 7. Compute the times interest earned ratios for the current and previous years. Are the current year results better, or worse than those for the previous year? 8. After Golden released its current year's financial statements, the company's stock was trading at $51. After the release of its previous year's financial statements, the company's stock price was $39 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about Golden's future success? Complete this question by entering your answers in the tabs below. ences Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 4-a. Stockholders' equity totaled $42,600 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. (Round your answers to 1 decimal place.) 4-b. Are the current year results better, or worse, than those for the previous year? Return on Equity Current Year Previous Year Current year return on equity ratio is: Better Worse
